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Banker’s Acceptance
a written order for a bank to pay a third party a stated amount of money on a specific date
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Barter System
a system of exchange in which goods or services are traded directly for other goods or services
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Certificate of Deposit (CD)
a document stating that the bank will pay the depositor a guaranteed interest rate on money left on deposit for a specified period of time
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Check
a written order for a bank or other financial institution to pay a stated dollar amount to the business or person indicated on the face of the check
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Collateral
real estate or property pledged as security for a loan
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Commercial Bank
a profit-making organization that accepts deposits, makes loans, and provides related services to its customers
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Credit
immediate purchasing power that is exchanged for a promise to repay borrowed money, with or without interest, at a later date
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Credit Union
a financial institution that accepts deposits from and lends money to only those people who are its members
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Debit Card
a card that electronically subtracts the amount of your purchase from your bank account at the moment the purchase is made
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Demand Deposit
an amount on deposit in a checking account
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Discount Rate
the interest rate the Federal Reserve System charges for loans to member banks
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Electronic Check Conversion (ECC)
a process used to convert information from a paper check into an electronic payment for merchandise, services, or bills
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Electronic Funds Transfer (EFT) system
a means of performing financial transactions through a computer terminal or telephone hookup
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Federal Funds Rate
the interest rate at which a bank lends immediately available funds to another bank overnight in order to meet the borrowing bank’s reserve requirements
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Federal Reserve System
the central bank of the United States responsible for regulating the banking industry
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Letter of Credit
a legal document issued by a bank or other financial institution guaranteeing to pay a seller a stated amount for a specified period of time
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Line of Credit
a loan that is approved before the money is actually needed
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Measure of Value
a single standard or “yardstick” used to assign values to and compare the values of products, services, and resources
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Medium of Exchange
anything accepted as payment for products, services, and resources
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Money
anything a society uses to purchase products, services, or resources
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National Bank
a commercial bank chartered by the U.S. Comptroller of the Currency
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NOW Account
an interest-bearing checking account; NOW stands for negotiable order of withdrawal
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Open-Market Operations
the buying and selling of U.S. government securities by the Federal Reserve System for the purpose of controlling the supply of money
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Reserve Requirement
the percentage of its deposits a bank must retain, either in its own vault or on deposit with its Federal Reserve district bank
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Revolving Credit Agreement
a guaranteed line of credit
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Savings and Loan Association (S&L)
a financial institution that offers checking and savings accounts and CDs and that invests most of its assets in home mortgage loans and other consumer loans
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State Bank
a commercial bank chartered by the banking authorities in the state in which it operates
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Store of Value
a means of retaining and accumulating wealth
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Time Deposit
an amount on deposit in an interest-bearing savings account
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